7 Rules For Lending & Loaning From P2P Platforms

how to get a loan from lending clubFrom www.consumerreports.org -

Since 2009, bankers have stopped paying any meaningful interest on deposits, they rarely lend to small businesses and when they do lend, it can be at rates in excess of 10 percent, even to borrowers with excellent credit. (The current annual percentage rate for low-interest credit cards is 10.4 percent, on average, according to Bankrate.com.)


Fortunately for consumers, in this new normal, the laws of supply and demand still hold true. New intermediaries—peer- to-peer lending platforms—are bridging the gap, enabling many people to lend or borrow.

Think of them as eBays for money: Just as eBay brings buyers and sellers together, peer-to-peer platforms bring borrowers in need of loans from $1,000 to $35,000 together with investors who want to earn better returns than those offered by banks.

Many borrowers are just recently learning about the great opportunity to borrow from their peers instead of the heavy-handed banks. Small-time business people, college students and families in debt are finding interest rates much more favorable for the debt consolidation and small business loans they seek through p2p lending platforms. Here are our article highlights:

If You’re Looking To Borrow

  • Check your credit score. Your FICO credit score will give you a general idea of what grade you’ll receive from Lending Club and Prosper, which in turn will inform the interest rate on your loan. The average FICO score of a borrower at Lending Club and Prosper is about 700.
  • Understand that there will be fees. Prosper calls them closing fees and Lending Club calls them origination fees.
  • Don’t ask for more money than you need just because getting a loan has never been easier. You can borrow $2,000 to $35,000, but the more you borrow, the more you’ll pay in interest.

If You’re Looking For a Lend/Invest

  • Diversify. Both Lending Club and Prosper encourage you to diversify your investments.
  • Brace yourself for some level of risk. Remember, you’re making an unsecured loan to unknown borrowers.
  • Use the community. An online network has grown alongside peer-to-peer lending platforms, creating databases and other resources to share wisdom about investing in such loans.
  • Remember that your competition is Wall Street. Hedge funds have been trying to swoop in and snap up the best loans before you get to them. They know opportunity when they see it.

(Go to full article)

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